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Thursday, January 17, 2008

World Bank Zoellick: US Slowdown Will Impact Emerging Mkts

WASHINGTON -(Dow Jones)- World Bank President Robert Zoellick downplayed Thursday the prospect that emerging markets are "decoupling" from the U.S., predicting that the slowdown in the world's largest economy will eventually have an impact worldwide.

Zoellick, answering questions at an event sponsored by the Economic Club of Washington, acknowledged that emerging markets have performed better than expected amid the global credit crunch, but said the outlook remains uncertain.

"I do believe it will have an effect," he said of the U.S. downturn.

On the other hand, Zoellick pointed to the strong growth of China and India as a sign that globalization is changing the interconnections between economies.

"The world isn't decoupled, but I do think that you're likely to see continued growth in the developing world even with some of the uncertainty in the U.S. market," he said.

When asked about recent troubles at the World Bank, in which Paul Wolfowitz was ousted as the bank's president last fall, he said the institution is on the path to recovering its credibility.

But he added that "people shouldn't underestimate the difficulty of that period of upheaval."

The bank has refined its role to provide more help for the poorest countries, while diversifying the services it offers to middle-income countries in order to remain relevant to that group, as well, he said.

"The challenge of adjusting the mission to a new era is going to take a considerable period of time," said Zoellick.